SUN Benchmark Mixed Early Week. FR0091 posted a yield increase of almost 3 bps yesterday. In addition to waiting for US inflation data next Friday, yesterday’s SUN
movement ahead of today’s SUN auction. Based on the survey, US inflation in May is projected at 0.7% MoM or 8.2% YoY. This inflation projection is still high on an annual basis (Vs. Apr. 8.3% YoY), even higher on a monthly basis (Vs. Apr. 0.3% MoM), questioning the effectiveness of the 50 bps FFR increase in early May. NHKSI Research sees that if US inflation has not slowed down, then the Fed reacts more aggressively beyond expectations, potentially causing the market to fluctuate again.
Corporate Bonds
Global Mediacom Issues Sukuk and Bonds. PT Global Mediacom Tbk (BMTR) is targeting to raise funds worth IDR 2.2 trillion from the Global Mediacom III Sustainable Public Offering (PUB) III Phase I 2022 and Sustainable Sukuk Ijarah III Global Mediacom Phase I
2022. (Republika)
Domestic Issue
Medical Device Import Tax Incentive Will Be Removed. The Ministry of Finance will evaluate the tax incentives for importing medical devices in line with the easing of the pandemic and a decrease in the volume of imported medical devices. It is known that Indonesia imports 20 types of medical devices every year. Based on data from the Central Statistics Agency (BPS) until April 2022, Indonesia imported around 2,932 tons of PCR test kits from abroad, 1,018 tons of masks, and 544 tons of ventilators. (CNN Indonesia)
Recommendation
Yield UST10Y Returns 3%, ahead of US May MoM CPI data projected to return high (Cons. 0.7%; Vs. Apr. 0.3%), next Friday. Yield UST10Y is up 10.5 bps from the weekend. Previously, a strong US labor market, supported by May Change in Nonfarm Payrolls data added 390k, with the May Unemployment Rate remaining low at 3.6%, indicating the US economy is ready for a more aggressive FFR hike. The negative sentiment of rising UST10Y yields has colored the SUN auction today. The government is offering SPN03220907 (New Issuance), SPN12230303 (Reopening), FR0090 (Reopening), FR0091 (Reopening), FR0093 (Reopening), FR0092 (Reopening), and FR0089 (Reopening) in today’s SUN auction.
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